Which of the following statements is true of current ratio?
A) It evaluates the retailer's ability to pay its short-term debt obligations.
B) It evaluates the optimal profitability of the retailer.
C) It evaluates the optimal productivity of the retailer.
D) It evaluates the cost incurred by human resources against organizational profitability.
E) It evaluates the retailer's ability to pay its long-term debt obligations.

Question

Quizplus · Accepted Answer

The current ratio evaluates the retailer's ability to pay its short-term debt obligations,such as accounts payable (payments to suppliers)and short-term loans payable to a bank,with short-term assets such as cash,accounts receivable,and inventory.

Which of the Following Statements Is True of Current Ratio